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1.2.1.1. General rules for concluding a contract

As a general rule, a contract is concluded by the means of one party sending an offer, and the other party accepting it. The contract shall be considered to be concluded from the moment of receiving the acceptance by the party which has sent the offer.

Furthermore, a contract shall be considered to be concluded, if an agreement in the required form has been reached between the parties on all of the essential terms of the contract (Article 432 of the CC of the RF). The essential terms of the contract are:

– the subject matter of the contract;

– the terms that are named in a statute, or in other legal acts, as essential or necessary for contracts of the given type;

– the terms with respect to which, by declaration of one of the parties, an agreement must be reached.

1.2.1.2. Declaring the contact as unconcluded

If any of the essential terms of the contract have not been agreed on, the contract, as a general rule, shall be deemed to be unconcluded. In this respect, the following factors shall be considered:

– the party cannot claim that the contract is unconcluded if: first, that the party has accepted the performance of the contract or otherwise acknowledged the validity of the contract; second, considering the particular circumstances, such a claim will contradict the good faith principle (Clause 3 of Article 432 of the CC of the RF);

– the contract shall not be considered as unconcluded, if the essential term, with respect to which an agreement has not been reached, can be covered by the general rules on obligations, or by a framework agreement. The application thereof shall not, however, be in conflict with the nature of the specific contract.[45]

1.2.1.3. State registration of contracts

Some contracts require state registration. Such registration is required, for example, for real estate rental agreements concluded for a period of not less than one year (Clause 2 of Article 609 of the CC of the RF), and for commercial concession contracts (Clause 2 Article 1028 of the CC of the RF). For third parties, the contracts which by law require state registration, shall be considered concluded from the moment of such registration.[46] Such a contract creates obligations for its parties, and cannot be declared by the courts as an unconcluded contract.

In its informative letter No. 165, dated February 25, 2014, the Presidium of the Supreme Court of Arbitration of the RF noted that the contract, which has not been duly registered, does not bear all of the consequences of the contract. Such a contract does not bear consequences which can affect the rights and interests of third parties who are unaware of the conclusion and the content of that contract. On the other hand, all legal consequences arise for the parties of the contract, from the moment an agreement has been reached in relation to all the essential terms. The full range of the consequences of the contract are enforced upon its state registration.[47] Such an interpretation of the provision has previously been conveyed by Decision No. 73 of the Plenum of the Supreme Court of Arbitration of the RF, dated November 17, 2011.[48]

1.2.1.4. Obligatory conclusion of a contract

In certain scenarios, the CC of the RF and other laws provide for an obligation of a party to conclude a contract. For example, such an obligation is set forth for organizations supplying energy, regarding the conclusion of power supply contracts.[49] In case the party/parties have an obligation to conclude a contract, it has to be concluded, in accordance with Article 445 of the CC of the RF. In the event of disagreements regarding the individual terms of the contract, the parties have the right to bring the case to the court, within six months from the moment the conflict arose.

If the party obligated to conclude a contract avoids its conclusion, the counterparty has the right to ask the court to coerce the party to conclude the contract. In this case, the contract is deemed to be concluded with the terms that are determined by the decision of the court, and from the moment that decision has come into force.

1.2.1.5. Conclusion of a Contract at an Auction

Unless otherwise implied from the nature of the contract, it can be concluded at an auction. General provisions on the conclusion of a contract at an auction can be found in Articles 447–449.1 of the CC of the RF. The order of organizing auctions in different domains is regulated in specific legislation.[50]

The auctions shall be held in the form of a tender, auction by bidding, or in another form prescribed by law. The latter category includes, for example, “reverse auctions” (reductions).[51] It can be organized for acquiring goods and services for state, municipal, and private needs.

The contract is concluded with the winner of the auction. Some laws and regulations provide the possibility (or obligation) to conclude a contract with the second place winner, in case the first place winner avoids the conclusion of the contract.

An auction conducted in violation of the rules may be declared invalid by a court, based on a complaint brought by an interested party, or in certain cases by the competition authorities. The declaration of an auction as invalid shall entail the invalidity of the contract concluded with the winner of the auction.

45

See Informative letter No. 165 of the Presidium of the Supreme Court of Arbitration of the RF, dated February 25, 2014, “On the Overview of the Judicial Practice Regarding the Disputes Related to the Declaration of Contracts as Unconcluded,” // “ConsultantPlus” Legal Directory System

46

The finding that the contract, which has not undergone state registration, shall be deemed concluded for third parties and not for the parties of the contract, has been determined in Federal law No. 42-FZ, dated March 8, 2015, “On Amending Part One of the Civil Code of the Russian Federation,” which came into effect on July 1, 2015.

47

See Clauses 2 and 3 of the Informative letter No. 165 of the Presidium of the Supreme Court of Arbitration of the RF, dated February 2, 2014, “On the Overview of the Judicial Practice Regarding Disputes Related to the Declaration of Contracts as Unconcluded,” // “ConsultantPlus” Legal Directory System

48

See Clause 14 of the Decision No. 73 of the Plenum of the Supreme Court of Arbitration of the RF, dated November 17, 2011, "On Some Issues of the Application of the Rules on Rent Contracts, Provided in the Civil Code of the Russian Federation,” // “ConsultantPlus” Legal Directory System

49

See Clause 3 of Article 15 of the Federal Law No. 190-FZ “On Power Supply,” dated July 27, 2010, // “ConsultantPlus” Legal Directory System.

50

See for example, Bankruptcy Law // “ConsultantPlus” Legal Directory System; Federal Law No. 229-FZ “On Enforcement Proceedings,” dated October 2, 2007, // “ConsultantPlus” Legal Directory System;

51

The terms “reverse auction” or “reduction” are not used in Russian legislation. These forms of auctions, however, are prescribed in Federal Law No. 44-FZ, “On the System of Public Procurement Contracts for Products, Works, Services for State and Municipal Needs” dated April 5, 2013, and in Federal Law No. 223-FZ, “On Purchases of Goods, Works and Services by Certain Types of Legal Entities,” dated July 18, 2011. In these laws the term “auction” is used for the identification of such procedures.